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Oil rises towards $68 as equities recover
Tue Aug 18, 2009 6:09am EDT Email | Print | Share | Reprints | Single Page [-] Text [+]
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By Joe Brock
LONDON (Reuters) - Oil rose toward $68 a barrel on Tuesday in line with a broad recovery on Asian and European stock markets after falling the previous day to a two week-low.
U.S. July housing data and producer prices, both due to be released at 8:30 a.m. EDT, will provide the next indication of the health of the U.S. economy, offering direction to markets. Investors are also awaiting weekly U.S. fuel inventory reports to be released on Tuesday and Wednesday for the latest sign of demand from the world's biggest energy user.
U.S. crude for September delivery was up 83 cents at $67.58 a barrel by 6 a.m. EDT. It had settled 76 cents lower at $66.75 on Monday, off a two-week low of $65.23 earlier. London Brent crude for October was up 66 cents at $71.20.
"Weakness of the dollar, rising stock markets and hurricane related risks to disruption in the U.S. are supportive to all energy markets today," said Carsten Fritsch, oil analyst at Commerzbank.
"However, I think these are short term support to oil prices. The inventory data later should confirm these hurricane risks are exaggerated as inventories are so high it can cope with some disruptions," Fritsch added.
The release of weekly API fuel inventory data at 4:30 a.m. EDT followed by U.S. government figures from the Energy Information Agency on Wednesday with expectations crude stockpiles will have risen for the fourth straight week.
INVENTORIES
A preliminary Reuters poll of analysts predicts crude stocks rose by 1 million barrels, as higher imports offset a slight increase in refinery activity.
Distillate stocks were seen up 400,000 barrels and gasoline stocks down 1.4 million barrels.
The previous session's sell-off in oil and equities markets was prompted by concerns over the pace of global recovery.
U.S. equities suffered their worst loss in seven weeks on Monday while Chinese shares saw their biggest daily percentage drop in nine months.
The U.S. dollar weakened against a basket of currencies on Tuesday, helping to underpin oil's gains. A weaker dollar makes commodities priced against the currency cheaper and therefore more attractive to investors.
Oil investors continued to monitor the growth of Hurricane Bill, the first of this year's season, which might disrupt Gulf of Mexico oil and gas production.
Hurricane Bill was expected to strengthen to a major category 3 storm by Wednesday, while the remnants of Tropical Storm Ana dissipated without threatening the U.S. Gulf oil patch, the U.S. National Hurricane Center said.
Energy markets are jittery over Gulf storms because the region produces a quarter of U.S. oil and 15 percent of its natural gas.
